How to invest $1 billion with purpose

Kuper, who lives with his family in Sydney and gained Australian citizenship more than 10 years ago, is a firm believer in the power of capitalism to be purpose-driven and humane.

His belief that private equity can help lift people out of poverty and improve their daily lives was heavily influenced by two leading thinkers on poverty and ethics while studying at Cambridge University.

His two PhD supervisors were Amartya Sen, who won the Nobel Prize for his contribution to welfare economics, and Baroness Onora O’Neill, who was head of the National Bioethics Commission.

“I was really privileged to study under these people and what I saw was they really bridged theory and practice,” Kuper says. After he graduated and made the move into private equity Kuper convinced former US president Bill Clinton to unveil the first LeapFrog private equity fund of $60 million in 2008.

“It was the 22nd of September – about a week after Lehman Bros collapsed – and we were enthused about this notion of profit with purpose with a new fund that would change the world,” he says.

Improving welfare outcomes

In hindsight, Kuper says the global financial crisis revealed a form of capitalism that wasn’t customer-centric, wasn’t inclusive and definitely was not well regulated.

Just over 10 years after its first capital raising LeapFrog employs about 60 people including 40 professionals in four countries, and has invested in 26 businesses serving about 167 million customers. Its primary focus is on what the World Bank calls “emerging consumers” who earn less than $10 a day.

LeapFrog has raised more than $2 billion from investors. Kuper says its success can be attributed to its specialisation in insurance and healthcare and the quality of its team including chief operating officer and South African country head, Gary Herbert, co-head of South East Asia, Michael Fernandes and co-leader for health investments, Felix Olale.

One great example of LeapFrog’s success is Goodlife Pharmacy, a chain of chemists headquartered in Kenya and serving East Africa. It has been a game changer in region where up to 30 per cent of drugs and pharmaceutical products have been found to be useless placebos.

Another brilliant success story is WorldRemit, a leading digital remittances provider threatening Western Union. This is a major disrupter because it has lowered the cost of remittances from as high as 20 per cent to between two and four per cent of the amount dispatched.

There is a broader lesson from LeapFrog's success. It has grown the average value of its investments by 40 per cent a year since inception by focusing on the 90 to 95 per cent people in emerging economies who own mobile phones but are not middle class or wealthy.

Local backers of the latest $1 billion LeapFrog private equity fund are QBE, Christian Super and HESTA.

ANZ Bank chairman David Gonski, who has mentored Kuper for several years says: “Andy is a brilliant person who is motivated by doing good much more than by making gain for himself. He has set an extremely high bar for himself which is based upon positively affecting the lives of millions of people. His success to date is a very good indicator of what he will achieve in the years to come.”